TMI Blog2017 (7) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin such time as may be granted by this Court. In my view, this grievance of the applicant for recovery of arrears of rent from the Official Liquidator is justified and deserves acceptance. As the direction sought by the Official Liquidator for reduction of the reserve price fixed by this Court in respect of the leasehold property in question is concerned, in my view, the interest of justice would be met with if such prayer is considered after a fresh valuation report is obtained by the Official Liquidator in respect of the said leasehold rights in view of passage of time. The Official Liquidator can apply for the said relief after such valuation report is obtained by his office in respect of the leasehold land in question. Company Application seeking an order and direction against the Official Liquidator to hand over quiet, vacant and peaceful possession of the open land admeasuring 4743.21 sq. mtrs, bearing survey no.194/1, village Majiwade, Thane (West) is rejected. The Official Liquidator is directed to pay the arrears of rent from the date of winding up of the respondent company till 30th June, 2017 within eight weeks from today and shall continue to pay the agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease agreement, the lease period would expire on 1st July, 2028 i.e. approximately after 11 years. 4. By an order dated 21st November,2006 passed in Company Petition No.600 of 1997 with Company Petition No.345 of 2002, the respondent company i.e. M/s.Devidayas Industries Limited was directed to be wound up. Pursuant to the said order passed by this court, the Official Liquidator took possession of various assets of the company in liquidation including the said leasehold open land. The Official Liquidator invited claims and received seven claims. Some of the claims are rejected by the Official Liquidator. 5. Pursuant to the orders dated 19th December,2012 and 5th February, 2013 passed by this court, the Official Liquidator has sold three residential flats of the respondent company (in liquidation) situated at Thane and one flat situated at Chembur. 6. By an order dated 26th February, 2012 passed by this court on OLR's report dated 9th July, 2012, this court fixed reserved price of ₹ 30 crores in respect of the property in question and permitted the Official Liquidator to sell the subject property along with other properties by way of public auction as per approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent company till 1999. He submits that in view of the enactment of the Maharashtra Rent Control Act, 1999, the provisions of Bombay Rent Control Act, 1947 were repealed. 9. It is submitted that under the provisions of Maharashtra Rent Control Act, 1999, the definition of the premises excludes vacant land. No protection is available to the tenant in respect of the vacant land under the provisions of Maharashtra Rent Control Act, 1999. He submits that parties are thus governed by the provisions of Transfer of Property Act, 1882. He placed reliance on section 111(g) of the Transfer of Property Act, 1882 which provides for determination of lease. He submits that under the provisions of the Transfer of Property Act, 1882, since the respondent who was a lessee of the applicant came to be wound up, the lease in favour of the respondent has come to an end by operation of law. 10. It is submitted that the Official Liquidator has made several attempts to sell the said property in question which itself indicates that the said property in question is no more required by the Official Liquidator for the purposes of beneficial winding up of the respondent company in liquidation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its winding up. He submits that the Official Liquidator cannot seek directions to handover possession of the property under any nomenclature such a lease, licence or care taker agreement in favour of any third party. He submits that it is not provided in the object clause in the Memorandum of Association of the company in liquidation to give the property on lease or licence by the company in liquidation as a business of the company. He submits that the principles laid down by the Supreme Court in case of Ravindra Ishwardas Sethna and another (supra) squarely applies to the facts of this case. The Official Liquidator is thus bound to return the said property in question to the applicant being lessor of the said property and also to pay arrears of rent. 13. Learned senior counsel for the applicant placed reliance on the judgment delivered by Division Bench of this court in case of Saraswat Co-operative Bank Ltd. Mumbai vs. Chandrakant Maganlal Shah and others, (2002) 1 Mh.L.J. 581 and in particular paragraph 26 of the said judgment and would submit that the Division Bench of this court has after following the judgment of Supreme Court in case of Ravindra Ishwardas Sethna and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior counsel for the Official Liquidator placed reliance on section 108(j) of the Transfer of Property Act, 1882 and would submit that the said statute does not prohibit the subletting absolutely. He submits that since in this case, there is no absolute prohibition provided in the lease deed, the Official Liquidator is entitled to grant the property on sub-lease or part with possession for the beneficial use of the winding up. 17. Learned counsel for the Official Liquidator placed reliance on the judgment of Madhya Pradesh in case of Shankar Prasad Goenka and another vs. The State of Madhya Pradesh, AIR 1965 MP 153 (V 52 C 48) and in particular paragraphs 4 and 11 in support of the submission that the lessor cannot unreasonably withheld the permission to grant the property on sub-lease or to part with possession. He placed reliance on the judgment of Supreme Court in case of Jabal C.Lashkari Ors.vs. Official Liquidator Ors. delivered on 29th March,2016 in Civil Appeal Nos. 3147-3149 of 2016 and in particular paragraphs 12, 19 and 20 in support of the submission that the Official Liquidator cannot be directed to handover possession of the land to the lessor since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the Official Liquidator that under section 108(j) of the Transfer of Property Act, 1882, the applicant has to show as to why it is withholding the consent for granting the property on sub-lease or for parting with possession in respect of the said property. He submits that there are large number of creditors of the respondent company in liquidation and substantial payment is required to be made to those creditors. He submits that if the leasehold property with lease for atleast another 11 years from today if is directed to be handed over to the applicant, the Official Liquidator will not be able to use the said property for generating income for the purpose of making payment to large number of creditors which purpose itself is a purpose for beneficial winding up of the respondent company in question. 21. Learned counsel for the Official Liquidator on instructions from the Official Liquidator states that the Official Liquidator is ready and willing to pay the arrears of rent in respect of the property in question to the applicant within such period as may be directed by this court. 22. Learned counsel for the Official Liquidator placed reliance on the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld submit that the judgment of Division Bench of this court in case of Saraswat Co-operative Bank Ltd. Mumbai (supra) relied upon by the learned senior counsel for the applicant is distinguished by the Full Bench of this court. 26. It is submitted by the learned counsel for the Official Liquidator that section 111(g)(3) of the Transfer of Property Act is not applicable to the facts of this case. There is no clause in the lease deed which permits the lessor to re-enter as contemplated in clause 111(g) of the Transfer of Property Act. He submits that the rights of re-entry has to be a part of the condition of the lease deed for a lessor to seek reentry. He submits that the mere order of winding up cannot be a ground to direct the Official Liquidator to handover possession of the land to the lessor when the company in liquidation continues to maintain its corporate existence until the same is dissolved upon completion of liquidation proceedings. He submits that the facts before the Supreme Court in case of Ravindra Ishwardas Sethna and another (supra) were totally different. The date of commencement of lease was not even available and it was not the case of the Official Liquidator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator is empowered to sublet the property in question. He lastly submits that if this court comes to the conclusion that the property in question cannot be sold by the Official Liquidator, the Official Liquidator may be permitted to grant the property on sub-lease or leave and licence or on any other arrangement till the respondent company in liquidation is finally wound up in all respect to enable the Official Liquidator to pay the claim of some of the creditors. 30. Mr.Dani, learned senior counsel for the applicant in rejoinder submits that the provisions of the Maharashtra Rent Control Act, 1999 are more harsher than the Transfer of Property Act, 1882. He distinguished the judgment of Gujarat High Court and Supreme Court relied upon by the Official Liquidator on the ground that the facts are totally different. 31. Insofar as judgment of Supreme Court in case of Nirmala R.Bafna (supra) relied upon by the Official Liquidator is concerned, it is submitted that the Supreme Court has not taken any different view than the view taken in case of Ravindra Ishwardas Sethna and another (supra). He submits that the judgment of Division Bench relied upon by the applicant in case of Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of annual term and on the terms and conditions setout therein. The said lease period would expire on 1st July, 2028 i.e. approximately after 11 years from now. It is not in dispute that the lessor has not terminated the said lease till date. By an order dated 21st November,2006, the respondent company has been already ordered to be wound up in Company Petition No.600 of 1997 with Company Petition No.345 of 2002. Pursuant to the said order passed by this court, the Official Liquidator has already taken possession of various assets of the company in liquidation including the said lease hold open land. 34. It is not in dispute that the Official Liquidator had thereafter applied for permission to sell various assets of the company in liquidation. By orders dated 19th December, 2012 and 5th February, 2013 passed by this court, the Official Liquidator was permitted to sell various assets of the company in liquidation including the leasehold rights of the said land and has sold three residential flats situated at Thane and one flat situated at Chembur. 35. Insofar as the leasehold land in question is concerned, this court had fixed reserved price of ₹ 30 crores by an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he leasehold land to the lessor in teeth of the orders passed by this court directing the Official Liquidator to sell the leasehold land in question and that also when the lessor has admittedly not determined the lease in question which is subsisting till 1st July, 2028. 39. A perusal of the record indicates that though the learned Official Liquidator had invited the claims against the respondent company in liquidation by issuing notices in the newspapers, admittedly the applicant lessor did not make any claim for recovery of possession of the leasehold land or any monetary claim. The Official Liquidator has thus already implemented part of the order by effecting the sale of the many properties of the company in liquidation and has also taken several steps to comply with those orders for the purpose of effecting sale of leasehold land in question. For more than 3 years of the orders passed by this court and the Official Liquidator issuing various public notices for the leasehold land in question, the applicant did not raise any objection against sale of the leasehold land in question. 40. Insofar as submission of the learned counsel for the applicant that upon the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease was for initial period of 60 years commencing from 1st July 1968 with a renewal clause under which the applicant had agreed to renew the said lease at the request of lessee for a period of 60 years at the same rent and upon the same terms and conditions contained in the said lease deed dated 1st July 1968. It is thus not in dispute that the respondent company in liquidation is a contractual tenant in respect of the said leasehold land which vests in this Court and is in control of the official liquidator. 43. It is not in dispute that the official liquidator still is in control of and is in possession of all the assets of the respondent company except those assets which are sold pursuant to the order passed by this Court from time to time. The official liquidator thus continues to exercise its powers prescribed under Section 457 of the Companies Act, 1956 and would continue to exercise such powers till final order of dissolution of the company in liquidation is passed after affairs of the said company would be completely wound up or in the other circumstances set out in the said provision. 44. Supreme Court in the case of S.Hardip Singh Anr. Vs. Income Tax Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kamala Ranjan Roy Vs. Baijnath Bajoria, reported in AIR 1951 SC 1, it is held by the Supreme Court if the consent is unreasonably withheld by the lessor for transfer or assignment of leasehold rights, the lessee is relieved of such obligations. 47. In this case, admittedly this Court has already granted permission and has issued direction to the official liquidator to sell the assets of the respondent company in liquidation including the leasehold rights in the open land in question which order is in force and is binding on the official liquidator and others. In my view, the leasehold right in favour of the company in liquidation for the remainder period of about 11 yeas with an option to apply renewal of another 60 years in the open plot of land admeasuring to 3743.21 sq.mtrs. is a valuable right and in the absence of determination of the said leasehold rights by the lessor, the official liquidator cannot be asked to handover possession thereof if the same is required for beneficial purpose of winding up of the respondent company. 48. A perusal of the record indicates that there are large number of creditors of the respondent company in liquidation who have lodged their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expire on 30th June 2028 after more than 11 years. There is also an option to apply to the lessee for further renewal for a period of 60 years. If such option is exercised by the company in liquidation, the lessor is required to grant such extension in favour of the company in liquidation. Before the Supreme Court, the parties had not even brought on record the date of commencement of the lease. The official liquidator had not even pleaded or brought on record that there was a lease for long duration. In my view, the facts before the Supreme Court in the case of Ravindra Ishwardas Sethna Anr. (supra) are clearly distinguishable in the facts of this case. In my view, substantial period of lease still remains with an option to renew the lease for further period of 60 years. In the facts of this case, the official liquidator cannot be asked to handover possession of the valuable assets to the lessor. 52. Insofar as the judgment of this Court in case of Patel Engineering Co. Ltd. (supra) is concerned, a perusal of the said judgment clearly indicates that the Official Liquidator and the the Ex Directors of the company in liquidation in that matter had conceded the position that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required for beneficial winding up of the company and he had no objection if the premises were to be surrendered to the landlord. Similar statement made by the learned Official Liquidator before the learned Company Judge was also made before the Division Bench of this Court, which was recorded in paragraph 15 of the said judgment. With such facts in hand, the Division Bench of this Court applied the principles laid down by the Supreme Court in case of Ravindra Ishwardas Sethna Anr. and upheld the order passed by the learned Company Judge directing the Official Liquidator to hand over premises to the landlord after recording his statement that he did not require the tenanted premises for the beneficial winding up of the company. 55. In my view, the said judgment delivered by the Division Bench is clearly distinguishable in the facts of this case. In this case, the reliefs sought by the lessor are strongly opposed by the learned Official Liquidator and it is strongly contended by the Official Liquidator that the leasehold land is required for the beneficial winding up of the company and for the benefit of the creditors of the company at large. Be that as it may, this Court has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold property to the Official Liquidator. 59. The Division Bench of Gujarat High Court in case of Jabal Lashkari vs. Official Liquidator of Prasad Mills Limited Ors. in Appeal No.66 of 2006 has construed the provisions of section 108 of the Transfer of Property Act, 1882 and has followed the judgment of the Supreme Court in case of Union Bank of India vs. Official Liquidator (1994) 1 SCC 575 in which the Supreme Court has set aside the directions given by the Company Court to the Official Liquidator to surrender the land to the lessors for avoiding onerous covenant of paying the rent of ₹ 1200/-. The Supreme Court held that the High Court may give leave under section 535 to the Official Liquidator to disclaim land of any tenure which is part of the property of the company in liquidation if it is burdened with onerous covenant. 60. It is held by the Gujarat High Court that the intention of section 535 is to protect the creditors of the company in liquidation and not mulct them by reason of onerous covenants which powers shall not be likely exercised. It is not the case of the applicant in this case that the Official Liquidator has disclaimed the land under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court also followed and applied the principles laid down by this Court in case of Vaz Forwarding Ltd. vs. State Bank of India (1996) 85 Company Cases 603 and held that the leasehold rights of the company were valuable assets and section 15 of the Rent Act did not create any legal impediment in the transfer / assignment of leasehold rights in the premises because till the company was dissolved it retained its corporate existence though the administrative affairs of the company passed on to the liquidator. 64. Insofar as the judgment of the Supreme Court in case of Ravindra Ishwardas Sethna Anr. (supra) is concerned, the Gujarat High Court rightly distinguished the said judgment on the ground that the decision in that matter will have to be read in the context of the controversy which the Court was called upon to decide. The date of the commencement of the lease was not available before the Supreme Court and it was not the case of the Liquidator that the lease was for a long duration. The Gujarat High Court considered its earlier judgment reported in (1999) 1 GLR 429 in which it was held that the leasehold interest is an intangible asset which is valuable in nature thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence until the same is dissolved upon completion of the liquidation proceedings as contemplated under section 481 of the Companies Act. 68. In my view, since this Court has already permitted the Official Liquidator to sell or transfer the leasehold rights of the company in liquidation to a third party, I am not inclined to accept the submission of the learned senior counsel for the applicant that the Official Liquidator if at all could have used the said leasehold land, the same could have been used only for the purpose for which the leasehold land was granted on lease to the company in liquidation by the applicant. Similarly, there is also no merit in the submission of the learned senior counsel that the property could not have given on lease or license as the same was not the object in the Memorandum of Association of the respondent company in liquidation. The facts before the Supreme Court in case of Ravindra Ishwardas Sethna Anr. (supra) were totally different and are distinguishable in the facts of this case. 69. A perusal of the record clearly indicates that it is an admitted position that Mr. Mathuradas Gokuldas was entitled to various lands including the leasehold l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the said status-quo order passed by this Court in the said notice of motion would not prohibit the applicant from taking possession of the leasehold land and if this Court directs the Official Liquidator to hand over possession of the said leasehold land to the applicant, the applicant would not create any third party rights in respect thereof is concerned, in view of the status-quo order passed by this Court against the applicant in the said notice of motion, which order is in force, in my view the applicant even could not have applied for seeking possession of the leasehold land in question in this proceeding. Be that as it may, the applicant has not made out any case for recovery of possession of the leasehold land from the Official Liquidator, as prayed or otherwise. In my view transfer of the leasehold rights of the company in liquidation for the remaining period which is for substantial period for clearing the debts of the creditors of the company in liquidation is for beneficial winding up of the company in liquidation and is permissible. 73. Insofar as the prayer of the applicant for recovery of the arrears of rent from the Official Liquidator is concerned, the Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
